A New Approach To Weather Insurance: Simple Project
Risk characterizes everyday life for many of the world’s poorest households. When this risk is uninsured, it poses a considerable cost to current and future welfare, as harmful events lead to reduced consumption and asset loss. The lack of efficient risk mechanisms, including functioning insurance markets, can explain common poverty trap situations in the developing world. Weather-indexed insurance products can largely mitigate the impact of uncertain rainfall on the incomes of the rural poor. Demand for these products, however, has been limited, and expectations for the potential of these products have not yet been met. In this research project, a new approach to the provision of weather insurance is proposed. The new approach builds on the advantages of index-based products and brings in several additional innovations.